In Business Everything is Negotiable

01 Dec, 2016 / Comments: Comments Off on In Business Everything is Negotiable / By

You know the old saying, “everything can be negotiated”? When it comes to business this is indeed true. Having the mindset that nothing is set in stone can allow you to save big and come out a winner. You may be intimidated and think that negotiating makes you look cheap. However, that way of thinking gives you a major disadvantage. Let’s take a look at some of the best ways negotiating can save you money when it comes to your business.

 

Negotiating with Employees

When it comes to how much you pay your employees, you’ll often need to negotiate. Although your employees may be happy with the wages you start them off with, there’s a good chance they’ll come to you for a pay raise eventually. What you decide to do is up to you, but make sure that you are respectful of the needs of your employees. If you are a start-up, then this likely means you know your employees on a personal level. However, this doesn’t mean you have to give your employees a raise when they ask for it. That being said, it does mean that you should be willing to hear their request out.

 

Negotiating with Potential Investors

Negotiating theory demonstrates that it’s important that you know your BATNA, otherwise known as a Best Alternative to a Negotiated Agreement. However, unfortunately if you are a start-up, your BATNA likely is going to be to not go out of business. That means it’s critical that you’re able to win over your negotiations with investors. To do this, it’s important that you never allow them to see you sweat. Investors will only put money into your company if they see that you’re confident. Additionally, make sure that you create investment terms before your negotiations meeting. Lastly, come to the negotiations table with “non-negotiables” and don’t be afraid to not budge on them.

 

Negotiating with Suppliers

You’ll likely find it extremely difficult to negotiate with suppliers, especially if you’re in the beginning stages of your business. This is because it’s tricky to come to terms to a volume discount when it’s too early to forecast your sales volume. Additionally, suppliers will be hesitant to give you credit when you don’t have a history with other suppliers. It’s recommended that you negotiate with suppliers in the same way you’d negotiate with lenders. Show them your best self and work to make them believe in your business just as much as you do. For example, paint a picture where one day you’ll be your supplier’s biggest customer.

 

Negotiating Contracts

When it comes to negotiating contracts, it’s important that you shop around for the right contractor before doing so. It never hurts to flatter contractors a bit by saying that you’d prefer to work with them, but you’ve found a contractor that’s given you a lower quote. Of course, you shouldn’t lie about this, so make sure you’ve found one that actually has before starting your negotiations. Additionally, if you mention that you’d be able to refer them to your friends afterwards that can be a major bargaining chip as well.

 

Office Supplies and Furniture

The best way to go about negotiating with a salesperson is to give them a good reason to give you a discount. For example, offering to buy the floor model, being able to wait for an order or purchasing a package deal. Additionally, being able to pay in cash and turning down a store’s free-delivery can give you a discount. Keep in mind that you’re better off negotiating with a local business than a national chain when it comes to office supplies and furniture.

William Mahnic
William Mahnic is a Finance Professor at Case Western University and has spent more than 20 years in the finance industry before becoming a professor. Mahnic has appeared as a commentator on both TV and radio talk shows including NPR, Crain's Cleveland Business, WKYC 3 and The Washington Post. He has been interviewed in BusinessWeek, Wall Street Journal and The Los Angeles Times.

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